How Organisations Are Cutting Estate Energy Costs by 10–15% - Without CAPEX Investment
In a world of constrained capital and rising energy costs, property teams are under increasing pressure to reduce overheads and deliver decarbonisation goals - without committing to major capital investment. But how?
One of the few initiatives that can deliver fast, low-cost savings is energy optimisation - sometimes referred to as ‘Energy-savings-as-a-service’ schemes.
Over the past decade, EEVS has helped organisations including Lloyds Banking Group, VodafoneThree and Royal Mail design and manage these programmes, either within Facilities Management contracts or as standalone agreements. We have also independently verified scheme savings across hundreds of client sites, with payments based on EEVS-verified results rather than supplier claims.
Our analysis consistently shows that 10–15% estate-wide savings are achievable within three years, depending on size and complexity. And because these programmes focus on optimising existing plant and equipment, rather than installing new technology, they can often be cashflow positive within the first year.
In this article, I’ll outline some of the key innovations that make these schemes successful — turning what might seem like a mundane operational issue into a compelling commercial opportunity.
Why optimise energy use?
It’s an obvious question, but for many organisations building energy consumption has historically received limited attention and has gone unmanaged. The result is often significant operational inefficiency, including:
Heating and/or cooling systems running when buildings are unoccupied;
Lighting operating out of business hours;
Temperature set points over-ridden by staff;
Building Energy Management Systems (BEMS) installed but poorly commissioned;
Plant and equipment generally operating inefficiently due to lack of optimisation or calibration.
Individually these inefficiencies may seem minor, but across large estates and portfolios they can represent millions of pounds in unnecessary energy spend. And with energy prices now significantly higher than in previous years, actively managing out these inefficiencies represents a major opportunity to reduce both cost and carbon.
What is an Energy-Savings-as-a-Service scheme?
The concept is straightforward. Customers pay a service provider - often a facilities management firm - to identify and eliminate wasted energy in day-to-day operations. Every unit of electricity or gas no longer consumed as a result is money saved - and with electricity costs approaching 30p per kWh, the economics can quickly become compelling.
How are savings achieved?
In truth, this is the least glamorous part of the story. Savings accrue by bringing in experienced energy managers to deliver the type of improvements that often slip through the cracks:
Optimising heating, cooling and ventilation schedules with operating hours
Adjusting temperature set points
Switching off systems in unoccupied spaces or floors
Re-commissioning or recalibrating Building Management Systems
Correcting control logic issues
Optimising plant operation
Ensuring vacant properties are appropriately ‘hibernated’ - not running BAU
Implementing transformer tap-downs or other technical adjustments
All good common sense stuff - and delivered systemically across estates or portfolios the cumulative impact can be substantial.
The Financial Logic: why the business case works
At the heart of these programmes is a simple economic principle: the cheapest unit of energy is the one you don’t use.
So if the electricity you do use is costing 30p per kWh, it can make sound financial sense to pay a provider, say, 10p per kWh to eliminate that waste. The unit rate difference - c20 pence per kWh - becomes pure cost savings.
Let’s look at a simplified example:
Annual estate electricity consumption: 30 GWh
Annual electricity spend: c£9 million
Achievable savings: 10% over three years
A typical savings trajectory might look like:
Year 1: 3.33% savings
Year 2: additional 3.33% savings (so 6.67% total)
Year 3: additional 3.33% savings (10% total - as the scheme is rolled out from site to site)
This equates to roughly:
£300k savings in Year 1
£600k savings in Year 2
£900k savings in Year 3.
The cumulative 3-year saving: c£1.8 million.
Now consider the service costs:
Service fees: c£125k per year (but based on a 10p per kWh saving rate, and a 10% gross saving)
EEVS independent verification: c£25k per year
Total Annual Service Cost: c£150k
In this example, the initiative becomes cashflow positive within the first year and delivers around £1.35 million in net savings by Year 3 — all without capital investment. For large estates, these programmes can represent one of the highest-return cost reduction opportunities available. The schemes can also be extended well beyond 5 or more years, so long as savings continue to be identified, delivered and sustained.
The commercial model: aligning incentives
Of course, these programmes only work if the supplier actually delivers the savings. That’s why the most effective schemes use structured commercial frameworks designed to align incentives and manage risk, including:
Minimum Savings Guarantee - the supplier commits to annual savings targets, typically ramping up to 10-15% over 3–5 years. If savings fall below the target level, financial penalties are specified.
Gain Share - if savings exceed the Guaranteed Saving Target, additional savings may be shared to reward high performance.
Fixed Fee – in practice, fixed fees often work better than “pay-as-you-save” models, which can create unsustainable economics for suppliers during the early stages of programmes.
Together, these core mechanisms create a performance-driven partnership model, rather than a traditional customer-supplier relationship.
Independent verification: the critical ingredient
Confidence is everything in performance-based contracts. So how do customers know that suppliers have actually delivered the savings they claim?
This is where independent verification becomes critical.
EEVS provides independent savings analysis and assurance - combining robust Measurement & Verification (M&V) and programme governance - that underpins the Energy-Savings-as-a-Service model. Without it, supplier-reported savings can quickly become contested, and trust - and the commercial model - breaks down.
With EEVS oversight in place, customers only pay for savings that have been audited and EEVS-verified, removing the risk of suppliers effectively ‘marking their own homework’.
The result is transparency, accountability and the confidence organisations need to commit to multi-year, performance-based energy optimisation programmes.
Why these schemes work
To summarise, energy-savings-as-a-service schemes succeed because they combine several powerful ideas:
Strong financial logic – eliminating wasted energy is cheaper than continuing to overpay
A well-structured commercial model – suppliers are rewarded for delivering guaranteed savings
Independent verification – customers only pay for proven results
Clear governance – structured oversight ensures transparency and accountability
A partnership mindset – focusing on long-term shared success rather than adversarial contracts
Ultimately, the value lies not in expensive technology, but in expert insight, disciplined energy management and well-designed governance and commercial frameworks.
When those ingredients come together, the result can be millions of pounds in verified savings- delivered quickly and with minimal risk.
Interested in learning more about how these services could work for your estate?
We’d be very happy to share insights from the programmes we’ve helped design, analyse and independently verify.
Ian Jeffries,
Managing Director